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MGT 4380 – Strategic ManagementInstructor: Dr Kimberly Boal

Mikey, Michael, Meredithe, Jake, Charly, Virginie, Natalie

+Google’s History

In 1998 current CEO Larry Page an undergraduate student at Stanford launch Google

In 2000 Google enter the foreign market and provide 10 different languages of their search engine As 2010, Google offers over 100 languages

+Information Revolution

Google has introduced revolutionary changes in the way that any kind of information is managed, shared and made useful. Google has created these products over a period of time.

Google Search

Google Earth

Google Desktop

Google Maps

Google Video

Google Groups

Google Mail

Google Trends

+Innovation

Google’s top goal in 2006 was to increase the scale of innovation

Google search engine,is the largest search engine on the Web.

“bottom up”/mass collaboration capability: which is Internet, personal messaging systems, and social networks

Google keeping up with Apple introducing the Android.

+Continual Change

Google was a Web-based search engine

Google now has changed and is capable of doing many more things Google maps: interactive Follow trends: finances Newest change it is now possible to get

satellite images of Earth at any point

+Creativity

Creativity- is the ability to combine ideas in a unique way or to make unusual associations between ideas.

Google's new marketing unit- Google Creative Lab Still in its developing stage Small teams Find new ways to communicate the

company’s innovations, intentions and ideals

+Google's Vision and Mission Statements

Google's Vision Statement: an open web benefits all users and publishers. “Open” does not be free

Google’s Mission Statement: is to organize the world’s first information and make it universally acceptable and useful

+Leadership

Level 5 leaders Modest and Willful, Humble and Fearless Set up their successors for even greater success for the

next generation. Many Google offices- Googlers work in small, focused teams

and high- energy environments.

+Top Executives

Larry Page- Co-founder/ CEO

Sergey Brin- Co-founder

L. John Doerr- Board of Director

Eric E. Schmidt- Executive chairman

Nikesha Arora- Senior VP, Corporate development & Chief legal officer

Patrick Pichette- Senior Vice President

+Internal Analysis

Google’s mission statement:

Strengths

Weaknesses

+Internal Analysis

Google’s Value Chain Raw material: web users Finished goods: “conversion” or click

+SWOT Analysis

External Opportunities and Threats

Two examples of Google's SWOT Analysis

+Opportunities

New Products along with increased positive outlook for Android Nexus One and Nexus S Android OS

+Opportunities continued

New Products Google Chrome and Chrome Book

+Threats

Microsoft & Yahoo! Search engines like Bing and Yahoo! Search

Vertical Search Engine

+Financials

Current Ratio Short term assets and short term liabilities

Gross Profit Margin 69.7

Net Revenue

+Two-Sided Market

+Global Market Share

+Time Line Trend

+Global Relations Crisis Drops Stock Prices

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Competitive Analysis

Yahoo

Bing

Baidu

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Operating in 50 countries and 25 different languages

They have good brand recognition

Losing Revenues in the past three years have cause layoffs through out the company.

30% of the revenues come from business outside the U.S.

Differences They receive income from mobile products, royalties,

licensing, premium e-mails, and advertising

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Yahoo and Microsoft collaboration started in 2009 effective till 2015.

Currently powering both Yahoo and MSN searches.

Advantages: Best Resources from each company:

Combines Microsoft’s new search technology, and Yahoo’s video and advertising capabilities.

Disadvantages: Cultural differences Takes away traffic from their own websites. Lacks brand recognition compared to Google Enhanced search capabilities that Google has had for long time.

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Have 80% of China’s Market Share

Advantages: Better knowledge of Chinese language Better relationship with Government

Filters

Similarities: Revenue comes from advertising Recently made an investment in Travel

Search Engine

+Google

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Investing in other interests

Diversifying their product line

AOL partnership Helps AOL with advertising Gives Google better video technology

New purchase of ITA Software Enhances Google’s travel tab

What’s Google doing to Combat?

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Low Cost and Differentiation Strategy

Low Cost Advantages: Low operating costs Same technology used for all

aspects of the business

Differentiation Advantages: Unique formula High customer utility Strong Brand Value

+Current Industry Standing (Visual Awakening)

Awareness of Comparable factors (compared to Yahoo) Cost – less overhead for operations and promotion, search

engine is promotion in itself Brand Awareness – Google has higher brand loyalty than Yahoo Views to site annually – Google=82.8% while Yahoo=6.42% Convenience of Information Accessibility and ease of use

By Google leading the industry in these key factors, we will not need to adjust corporate strategy as aggressively.

+Doing What Google Does Best…

Google does very well at adhering to the hedgehog concept and follows the three determining factors Passion – Google hires employees who strive for innovation in

R&D and enjoy creating new globally accepted, innovating ideas. Executives allow free time for Google employees to work

on their own projects they are currently passionate about This helps result in the greatest effort towards new

product ideas and is the reason some of the most innovative ideas are formulated

+Doing What Google Does Best…

What Google is the best at is also their mission statement: Mission – Organize the worlds information and make it universally

accessible and useful We have best search engine online today (most viewed) We must continue to have best search engine because 97% of our

revenue is from advertisements Advertising expenditures for this industry have rose:

11% in 2008 3% in 2009 12% in 2010 for US internet companies ( 1/3 came from

American companies

+Reaching Beyond Current Demand

More people are naturally migrating to online materials for their information research.

Industry is naturally growing in customer base because online business is the new status quo for profit and non-profit firms

Even first time internet users are bound to use Google at some point to explore the internet.

We should aim to attract soon-to-be customers, rather than refusing customers or unexplored ones (three tier framework)

+Reaching Beyond Current Demand Unexplored customers:

People who search information on non-internet resources Not worth Google trying to attract

Refusing Customers: Already have loyalty with other search engine Internet “cult followers” are hard to sway

Soon-To-Be Customers: Optimal group for Google to try to reach These internet users may be unsatisfied with current search engine Should advertise improvements in our search engine and pointing

out flaws of other ones.

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Google’s Corporate Strategy

“The corporate strategy is usually defined as those strategies concerned with the board and long term questions of what business(es) the organization is in or wants to be in, and what it wants to do with those businesses”

Google is operating the Internet and Computer Software industry

Google operates primarily in one and only industry

Google’s long term objectives are to move the organization forward: Growth strategy.

+Google’s Organizational Growth Strategy

The company implement that strategy through:

Concentration strategy

Vertical Integration

Horizontal Integration

Diversification

Google operates internationally as its main business support is Internet.

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Concentration Strategy

Google meets its growth objective through increasing its level of operation in this primary business

Google looks for ways to grow through different combinations of its present product(s) and market(s).

Google’s options to grow:

Product and Market exploitation

Product development

+Concentration strategy

Product and Market exploitation

The product/market exploitation strategy option describes attempts by the organization to increase the sale of its current product(s) in its current market(s) .

By developing its core product, Google uses incentives to get current customers to buy more, or advertises other uses for the product:

Google Chrome Google Co-Op Google Labs

+Concentration strategy

Product Development

Google focuses on complementary products and services that are consumed alongside their products or services.

The company developed applications and solutions which respond to their consumers’ full needs.

Google created new applications that provide a highest level of product performance, of functionality, of product innovation and the latest technology.

Gmail Google Scholar Google News

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Vertical Strategy

“Backward” Vertical Strategy: occurs when a company decides to merge with or acquire its suppliers

It is the ownership by the same company of different functions in a supply chain relating to the provision of a particular good or service

Through the years, Google: built its own server computers built and operated its own data

centers wrote much of its internal

operating software generates some of the

electricity for its buildings

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Horizontal Strategy

Strategy to increase your market share by taking over a similar company.

This can be done through take overs, mergers our buyouts.

One of the biggest Google buyout was Youtube,

The combined companies focus on providing a better, more comprehensive experience for users interested in uploading, watching and sharing videos

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Diversification

There is an ambiguity in either Google is still operating in a single business.

Google explores new opportunities constantly through a solid base of research and development

Google use a “related diversification” strategy as Google moved into a new industry but similar to the company’s current business. Google tried to find a strategic fit.

Google Mobile Services

Nexus One and Nexus S Software development kit for developers to create applications for Android-based phones

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Growth Strategy Implementation Strategy implementation skills are not easily mastered.

Implementation is often defined as the most difficult aspect of managers work, often more difficult than strategic analysis or strategy formulation.

Google implemented its growth strategies through several types of actions: Internal Development Acquisitions Strategic Partnering

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Internal Development

The fact of growing by creating and developing new business activities itself, without the help and action of other entities.

Need for resources, distinctive capabilities and core competencies.

Google has a strong willingness to accept risks of starting new business:

Time frame and development costs associated with the creation of a new business.

Google’s 2nd quarter results for 2010 show a 22% increase in internal development spendings

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Internal Development

One of the biggest internally developed projects of Google is Gmail

Initially the software was available only internally as an email client for Google employees.

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Acquisitions

An acquisition is a corporate action in which a company buys most, if not all, of the target company's ownership stakes in order to assume control of the target firm.

Since 2001, Google has acquired many companies, mainly focusing on small venture capital companies.

Google has acquired over 90 companies.

Today, several of Google’s products are derived from acquisitions including Docs, Earth, and YouTube.

+Acquisitions

Google’s biggest acquisitions:

#1: DoubleClick display ad technology, $3.1 billion

#2: YouTube video sharing site, $1.65 billion

#3: AdMob mobile advertising, $750 million

#4: Postini email security and services, $625 million

#5: Android mobile platform, "up to" $50 million

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Strategic Partnering

A partnership is an arrangement where parties agree to cooperate to advance their mutual interests.

Google has partnered with many other organizations for everything from research to advertising

Among all its partnerships, some were particularly important and enable Google to grow rapidly.

#1: AOL #2: GeoEye for Google Earth #3: National Aeronautics and

Space Administration (NASA)

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Environmental Initiatives

Built the largest solar panel

Investment in Wind energy

Investment in enhanced geothermal system

Operates on 50% less energy

Recycle 100% of the electronic waste leaving Google

Buy food from local farmers

Donations for bike riding